How Australian Companies Can Expand Abroad With PEO

There is already a wealth of export opportunities between Latin America and Australia. The next step is to seek out specific opportunities with Latin American countries. This could involve finding gaps in the service market in Latin America where your company has strengths. Or you could set up an entity in Latin America to receive Australian imports and then distribute them. The options are extensive. Sending an employee abroad to complete market research, make alliances and sign deals could form a key pillar in your business expansion.

As you look to expand your business outside Australia, it will become necessary to hire staff abroad. This step may serve as a chance to test the market before you have established a foreign subsidiary. Hiring staff abroad before setting up your company can reduce risks and costs. Given the legal and tax complexities of hiring staff in a foreign country, you may consider an international PEO to assist you.

What is a Professional Employer Organisation (PEO) in Australia?

PEO is a high-value service that supports small-to-medium enterprises (SMEs) outsource human resource requirements. A PEO can pay wages, take care of tax requirements and provide staff with employee benefits such as health insurance. This gives your firm more time to focus on its business purpose, and benefit from outsourcing your human resources needs to experts. So how can your firm hire staff overseas through a PEO? First, you need to decide which PEO company you want to partner with.

Step 1: Find a PEO for your business

To begin, consider your company needs for human resources. What services do you want to outsource? You may want them to take care of payroll and onboarding, but your firm prefers to recruit the staff. Alternatively, you may want the PEO to source you a local employee in Latin America that fits your brief.

Do some research on the PEO. What sort of reputation do they have in your expansion country? You should consider the level of risk in the country your expanding to. Does the PEO have resources to handle this risk? Highly regulated countries will have more laws necessary to comply with so you need to be confident in their capabilities to adequately provide for your firm. Check the PEOs client list to ensure its an appropriate provider for your firm, industry and country. Once you have chosen your PEO, you will form an agreement.

Step 2: Create a ‘Client Service Agreement’

PEOs use a co-employment model to hire staff for your firm. The agreement will dictate the control you have of the employee and stipulate the responsibilities of the PEO. This will most likely include outsourced human resources requirements and payroll for tax and compliance purposes. The agreement will state what employer responsibilities are allocated to your business, and which to the PEO.

It’s important to note that the business retains management over the employees. Each client service agreement will look different as different businesses will outsource different services. Once the agreement is formalised, the PEO can employ staff abroad.

Step 3: Recruit Staff

Depending on the services you outsource to your chosen PEO, you may already have found the staff member you want to hire. Alternatively, the PEO can take charge of recruiting staff in your expansion country and they provide options to your businesses. PEOs offer extra flexibility when you’re unsure of your expansion country, and employees can be recruited from all over Latin America.

Once the staff member has been approved, the PEO will then begin the hiring process, complying with all the applicable in-country legislation. The staff member will sign the co-employment contract which states what human resources responsibilities are assigned to the PEO, and the normal business operations responsibilities assigned to the parent company. PEOs are able to onboard foreign employees must faster and cheaper than traditional businesses.

Step 5: PEO Provides HR Services to Your Overseas Employees

Once the client service agreement is set up and co-employment contract signed, firms can then operate with their employees in place, working overseas. Your business continues at normal at home, while the PEO pays your employee abroad. The overseas employee will also receive other staff benefits offered by the PEO. PEOs can offer localised support and advice to employees abroad.

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  Employee benefits: Employees of SMEs can experience large enterprise employee benefits through a PEO. Due to economies of scale and specialisation, PEOs can offer comprehensive health and dental insurance and other benefits to employees that SMEs could not usually afford. Employees receive better human resource services, training and health, educational benefits and safety manuals. Such benefits ensure a lower staff turnover and keep your staff happy.

Additionally, the PEO pays all the relevant taxes in your chosen country of expansion, so you can rest assured that your firm is compliant. Many small businesses are liable to fines each year for incorrect payroll practices.

Step 6: Operate Your Firm in Conjunction With the PEO

Now your new employee’s needs are taken care of and they are working overseas, you can get on with your business at home. PEOs offer HR management systems and handle routine tasks so you have more time to focus on your business purpose. PEOs ensure state and federal compliance which is important for firms creating budgets for foreign country operations. Often, regulations vary from country to country so using country experts saves time researching laws. This service lets the business focus on its core competencies, and benefit from outsourcing a business function. It is likely your firm will have a lower employee turnover by outsourcing your human resource requirements.

Want to know more?

Whether you’re expanding into your first or your fifth country, an International PEO can help your organization expand its presence. Biz Latin Hub’s reach touches all key Latin American jurisdictions —and it can help you break into any one of these markets.  For organizations that need agility and flexibility, partnering with an International PEO is absolutely the right move.

If you’d like to find out more information about whether or not an International PEO is right for your Latin American expansion, reach out to Biz Latin Hub today.